There has been a new legal development for Kwon Do-hyeong, also known as Do Kwon, the disgraced founder of collapsed crypto company Terraform Labs.

In March South Korean national Do Kwon had been arrested in Podgorica, the capital city of the Balkan country of Montenegro. Soon after that, both the US and South Korea sought his extradition to their respective jurisdictions.

Kwon and a second person identified as Han Chang-joon, Terraform Labs’ former finance officer, had been arrested when they tried to board a flight to Dubai.

Flight risk

Montenegrin police had charged the two suspects with forging official documents after police alleged they had found doctored Costa Rican passports, a separate set of Belgian passports, laptop computers and other devices in their luggage.

A court in Podgorica had ordered them to be placed in a 30-day pre-trial detention, and a bail of 800,000 euros ($880,640) had been granted to Do Kwon and Han Chang-joon.

But now Reuters has reported that a higher court in Montenegro on Wednesday has scrapped this bail, and the two remain in pre-trial detention.

Reuters reported that the higher court agreed with a prosecutor that a bail of 800,000 euro could not be taken as a solid guarantee, nor the duo’s promise they would not run away once they are released from detention, the court’s spokeswoman told local media.

The prosecution maintained that the defendants, once released from detention, would have no interest to stay in Montenegro where they would await their extradition.

The US Securities and Exchange Commission (SEC) had “charged Singapore-based Terraform Labs PTE Ltd and Do Hyeong Kwon with orchestrating a multi-billion dollar crypto asset securities fraud involving an algorithmic stablecoin and other crypto asset securities.

Following Do Kwon’s arrest, the US District Court in Manhattan also made public an eight-count indictment against him for securities fraud, wire fraud, commodities fraud and conspiracy.

The defendants, who at a hearing earlier in May denied any wrongdoing over the charges, had reportedly told the court they have property worth millions and that the bail would be posted by their wives.

On the run?

In 2022 Do Kwon had moved from South Korea to Singapore with his family following the collapse of his $40 billion digital asset project – which included the stablecoin Terra and its sister token Luna.

It is thought that nearly 250,000 people had invested in Terraform Labs’ coins, and blockchain analytics firm Elliptic estimated that investors in TerraUSD and Luna lost an estimated $42 billion.

The reclusive Kwon insisted neither he nor his company made money on the crash, but he did not exactly help his cause.

He is known for his caustic remarks about detractors, and told a YouTube crypto channel a week before the demise of TerraUSD, “95 percent [of coins] are going to die – but there’s also entertainment in watching companies die too.”

Just before the implosion he told followers on Twitter, “I love chaos.”

But on 13 May 2022 he tweeted, “I am heartbroken about the pain my invention has brought on all of you.”

But authorities did not agree with his protestations of innocence and in September 2022 South Korea issued an international arrest warrant for Do Kwon, as well as five other unnamed people he worked with at Terraform Labs.

Interpol also issued a “red notice” for his arrest.

The arrest warrant alleged violations of the South Korea’s capital markets law, and all six individuals were said to be located in Singapore.

The only problem was that Do Kwon was nowhere to be found.

Do Kwon previously denied that he was in hiding or on the run, but he did not reveal his whereabouts after police in Singapore could not locate him.

In December South Korean police said they believed Do Kwon was hiding in Serbia, after he had travelled via Dubai to an unknown country after leaving Singapore.

South Korean police had travelled to Serbia to track him down, before he was eventually arrested in Montenegro in March.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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